Hyundai Motor Co. is looking into building an assembly plant in Latin America. If the automaker chooses a site in Mexico, one consultant says, the plant could ship small cars to the United States also.
Hyundai has begun conducting feasibility studies on various locations for a plant in Latin America, including Mexico, says spokesman Oles Gadacz. "We see big growth potential in the Latin American vehicle market and recognize the need for a local plant," he says. No final decision has been made, Gadacz says.
Hyundai aims to boost its sales in Central and South America more than tenfold to 1.8 million by 2010.
If Hyundai set up shop in Mexico, it would join several other automakers that are looking to produce small cars there, said Joe Langley, senior auto analyst for consulting firm CSM Worldwide in suburban Detroit. The Nissan Versa, for example, is built in Mexico.
New free trade agreements between Mexico and South America mean that a factory in Mexico could serve both North and South America, Langley said. That also would avoid the currency fluctuations that would come with a factory in Brazil.
Speaking at a conference in Nashville last week, Langley said Hyundai plans to assemble the Accent in Mexico, where labor costs are lower than in the United States.
Through October, Hyundai sold 31,872 Accents in the United States, all imported from Korea, up 5.9 percent. No other Hyundai car nameplate is up this year. John Krafcik, Hyundai Motor America's vice president of product development, has said he could sell twice as many Accents if he could get them.
Hyundai now sells its Asia-built vehicles in Mexico under the Dodge brand. "There has been a lot of gossip and rumors" about a Hyundai plant, a high-level Chrysler LLC executive in Mexico said. "We have an agreement with Hyundai, and so, if they were doing something, we would know about it. Otherwise, they would be breaking the agreement."
Hyundai's Gadacz said the contract with Chrysler expires next year.
In February, Hyundai announced plans to assemble Hyundai vehicles in Brazil from imported kits. It already has a similar arrangement in Venezuela.
Hyundai's wages are among the lowest in the industry. Workers at the Alabama plant start at $14 an hour. But Langley said even that wage wouldn't allow Hyundai to produce a B car profitably in the United States.
Stephen Downer contributed to this report